A top Biden administration official indicated that the ongoing student loan payment pause is going to end, and payments will resume. But he did not confirm a specific timeline, leaving borrowers guessing about when and whether to plan for repayment.
Here’s where things stand, and what borrowers should expect.
Student Loan Payment Pause Continues Through August
For over 26 months, payments on most federal student loans have been paused, and interest has been set to zero. Collections efforts against defaulted federal student loan borrowers have also been suspended.
That relief was originally provided through the CARES Act, which Congress passed in March 2020 in response to the Covid-19 pandemic, and it was supposed to last for six months. But President Trump, and subsequently President Biden, issued a series short-term extensions. Biden’s most recent extension is now set to end on August 31, 2022, which means billing would resume in September.
Will The Student Loan Payment Pause Get Extended Again?
But Biden administration officials have hinted that yet another extension of the payment pause may be coming. In response to a reporter’s question about whether the President would extend the relief again beyond August 31, White House Press Secretary Jen Psaki told reporters in April that the officials would “continue to assess” key economic indicators “including costs and inflation,” seemingly leaving open the possibility of another extension. “The Department of Education will look at that and a range of factors as we get closer” to August, she said.
Last week, Education Secretary Miguel Cardona said in an interview on “Symone” on MSNBC, “At some point, people are going to have to start paying what they can afford to pay” on their student loans. While this clearly indicated that the payment pause won’t last forever, Cardona also declined to confirm that student loan payments will actually restart this September. He said that Education Department officials are conferring with the White House about “about when to restart payment,” and he promised borrowers “a long on-ramp with clear information” before billing resumes.
The lack of commitment to a specific timeline gives the administration flexibility to extend the payment pause beyond August 31. But it also leaves borrowers with broad uncertainty about what will ultimately happen with their student loan payments.
Biden Administraiton Works to Implement New Student Loan Relief
One of the reasons that the Biden administration might extend the student loan payment pause beyond August is that the implementation of new student loan relief initiatives might not be completed by then.
The Biden administration is working on implementing the Limited PSLF Waiver program, which significantly broadens eligibility for a critical student loan forgiveness program for public service borrowers; that program is in effect until October 31, 2022. The administration also recently announced an IDR Adjustment initiative, which will bring millions of borrowers closer to student loan forgiveness through income-based repayment programs; the Department has indicated that implementation of that initiative may not occur until January 2023. And the administration announced Operation Fresh Start, which will automatically remove millions of federal student loan borrowers from default — but Biden officials have not provided much details on an anticipated timeline.
Given that these initiatives would not be completed until well after August, the Biden administration may very well extend the payment pause again into the fall, or beyond.
What About Broad Student Loan Forgiveness?
As uncertainty persists about the resumption of student loan payments, the debate about broad student loan forgiveness continues, as well. President Biden and top White House officials have indicated that some sort of executive action-based student loan forgiveness effort is under serious consideration, but no final decisions have been made. Administration officials have repeatedly said that a decision on broad student debt cancellation would be made before the end of the student loan payment pause — or, the payment pause would be extended again.
In the MSNBC interview, Secretary Cardona continued to leave the door open to some sort of broad student loan forgiveness initiative, but declined to make any commitments. “I don’t have anything to share with you right now, [but] I can tell you, these conversations are ongoing,” he said.